It has been a roller-coaster ride for the Spanish property market over the past few years, but there are signs of recovery. For the first few years of the Noughties, Spain experienced strong economic prosperity and the housing market flourished, with Brits migrating to the country in droves. But from 2008 to 2013, when the economy suffered, property prices fell nationwide. This, however, was not all bad news. Costa loving Britons found themselves with a once-in-a-lifetime opportunity to purchase a property in Spain at lower prices.
As market conditions started to improve in 2014, and with Sterling performing well against the Euro, Brits negotiated some bargain basement property purchases. Foreign buyers – led by the Brits – bought 17% of the property sold in Spain last year. Construction, which had slowed almost to a halt, picked up again in 2014. Land prices rose too, and this is a factor likely to feed through into higher sale prices in the coming months.
Marc Pritchard, sales and marketing director for leading Spanish housebuilder, Taylor Wimpey España, comments: “Spain’s property market in 2015 was the best we have seen since the high of 2005/2006. The start of this year has been equally encouraging and with international demand rising again, the market is set to flourish over the coming months. Another positive sign has come from Spain’s largest banks that are starting to lend again, with enticing interest rates available and a real focus on international clients.”
The firm’s managing director, Javier Ballester, is confident that the market will continue to thrive this year. He said: “The start of the year has been extremely encouraging and with international demand rising again. The growing talk of a potential Brexit is yet to have an impact as British buyers are responsible for the most sales so far this year, and there is nothing to suggest that this trend will not continue throughout 2016. Our latest figures show Spain is still very much top of the list for many potential buyers and we are very excited to see what the next 12 months hold for the market.”
Many Brits seeking a new life or a bolthole in Spain opt for property on the Costa Blanca, the Costa del Sol or Almeria, where prices start from around €40,000.
Barcelona and Madrid, widely considered to be among the hippest cities in the world, are also popular, as are the Canary Islands, particularly Tenerife, Fuerteventura, Gran Canaria and Lanzarote. The Balearics, most notably Mallorca and Ibiza, along with Marbella and Costa Brava remain highly sought-after regions.
You probably already have an idea of the area you want to buy in, but if you’re torn between two or more options, there are a number of considerations to bear in mind.
If you’re after a holiday home you’ll visit throughout the year, be sure that the climate is suitable at the times you’re likely to go. This is also important if you hope to earn rental income from your property – are your potential guests likely to want to visit when you don’t want to go?
Will you be within easy reach of local shops and important amenities? A long round-trip to the supermarket will soon become tiresome.
Check out the regularity of flights at all times of year from your local airport – can you get there at convenient times and is there an alternative airport? Budget airlines have a habit of dropping minor routes, or only operating to certain airports in the summer.
Finally, look into whether all the amenities and attractions you expect to visit are open out of the traditional season – the kids may not be pleased if their favourite theme park is shut for the duration of your winter break.
There are some building restrictions in place when it comes to developing coastal homes, due to an oversupply in parts of the country. Make sure you contact the Coastal Demarcation office in your region to get a certificate to certify that the property is not affected by the 1988 Coastal Law (Ley de Costas 1988). The Spanish Coastal Law defines a public domain area along the coast and a further zone where special restrictions apply to private ownership. The aim is to make the whole length of the coastline accessible to the public and to defend it against excessive urbanisation and erosion.
Exercise extreme caution if the Land Registry record shows that the property you wish to buy is built on rural land. In normal circumstances, this type of land is reserved for agricultural use and you would need to undertake additional checks with the municipal and regional authorities to ensure that full planning permission has been obtained for residential use.
Buying off-plan property inevitably involves higher risk than buying re-sale property. If you are considering buying off-plan in Spain there are a number of points to consider.
Spanish banks are offering generous financing for properties in Spain in an effort to offload the last remaining discounted repossessed properties on their books, many of which are listed for sale online on the major Spanish banking websites, as well as on dedicated Spanish property portals.
In order to secure your chosen property, you would normally be required to sign a reservation agreement and pay a small fee – which is negotiable – to take the property off the market for, usually, 30 days. If the full private contract is then signed within the reservation period, the fee is deducted
from the purchase price agreed. If not, it may be lost.
You would then be required to sign a contract which gives the buyer the “option” to buy a property or a full private contract, which specifies a period within which completion must take place. A larger deposit of 10% to 20% of the full purchase price needs to be paid at this point.
Prior to signing the contract and paying the full deposit, it is crucial that you have undertaken all necessary searches and legal enquiries.
The buyer needs to pay the balance of the price upon completion, at which point the seller must transfer ownership of the property to the buyer.
Legal ownership is transferred in the office of the Notary (Notario) – a public official appointed to perform certain legal duties in the district – who prepares the conveyance document (Escritura de Compraventa).
Once the Escritura de Compraventa has been signed before the Notario, all taxes must be paid and the Escritura presented to the Land Registry for registration.
Allow for between 10% and 15% of the purchase price to cover the costs of buying your new home in Spain. This will cover transfer tax, Land Registry, the Notario and legal fees.